“Rule of Law” is both a play on my name, and a statement of my values. The rule of law is a foundation for both our liberties and for order. The rule of law respects us as equals. It allows us to organize our lives, plan our futures, and resolve disputes in a rational way. There are those around the world and throughout history who have fought in great struggles for the rule of law. My role is more modest. I am a lawyer at the law firm of Sabey Rule LLP who works with people, assisting them with estate planning, probate and estate administration. I also assist people in resolving disputes about wills and estates. In this blog, I write about some of the legal topics that I deal with in my law practice, and about other legal issues that interest me. In doing so, I hope that I help others learn more about law, and that I encourage discussion about law and law reform. I hope that, in some small way, I help nurture the rule of law. You may contact me at my office at #201 - 401 Glenmore Rd., Kelowna, B.C., Canada; V1V 1Z6; telephone number: (250) 762-6111; email: s.rule@sabeyrule.ca.

Blog Archive

Monday, March 28, 2016

Kish v. Sobchak Estate

I am always appreciative when a court provides me with
fodder for two or three blog posts in one case. I am not suggesting that the
five judges of the British Columbia
Court of Appeal in Kish v. Sobchak Estate, 2016 BCCA 65, had my blog in mind
when they released their reasons for judgment, but I am thankful for the
material nonetheless. The case deals with significant issues in wills variation
cases, including the obligations to each other that spouses who marry later in
life (each planning on leave his or her wealth to his or her descendants) have to each other,
the standard of appellate review of trial decisions in wills variation cases,
and the extent to which the court considers family law in determining spouses
obligations to provide for each other in wills.

In this post, I will outline the facts and the decision. In
the next post I write about this case, I will discuss the standard of review by
the Court of Appeal of wills variation judgments made by the Supreme Court of
British Columbia. In the third post on this case I will write about the Court’s
comments on the relationship between family law and wills variation cases.

Marie Kish and Edward Sobchak had a romantic relationship
from no later than 1991 until Mr. Sobchak died in 2013. During at least t he
last five years, they lived together in Ms. Kish’s house, and the trial judge
found that they were common law spouses. Mr. Sobchak also retained a separate
home.

They each kept separate finances, and Ms. Kish’s will left
her estate to her son and grandson. In his last will, Mr. Sobchak left most of
his estate to his daughter, Kimberly Doyle.

Ms. Kish was 72 years old by the time of trial, and had severe
dementia. Her main asset at the time of Mr. Sobchak’s death was her home, with
an assessed value of $287,000. The home was mortgaged and about $65,000 was
owing on the mortgage. Her income was approximately $19,000 per year, and the costs
of her care in the care facility in which she was living were a little under
$2000 per month. There was a shortfall of about $5000 per year of income to
meet expenses, unless her house were sold or rented out.

The value of Mr. Sobchak’s net estate was $186,000. This amount
does not include $62,000 that Mr. Sobchak either lent or gave his daughter, nor
$12,000 she withdrew from his accounts. Ms. Doyle also received $250,000 as the
beneficiary of her father’s Registered Retirement Income Fund.

The Court of Appeal reduced the award from $100,000 to
$30,000. Two factors were significant in the Court’s decision. One, in view of
Ms. Kish’s circumstances, a large award would not provide much practical
benefit to her. Secondly, both Mr. Sobchak and Ms. Kish began their
relationship later in life, after accumulating their own assets, and both
wished to provide for their children.

Madam Justice Newbury, writing for the Court, framed these
issues early in the reasons for judgment as follows:

[2]The
case at bar requires us to deal with some other realities being experienced by
many in the postwar generation as it passes its wealth to the next. Those
realities include the greater frequency of divorces, re-marriages and ‘serial’
relationships. In this case, the testator and the plaintiff were mature adults
when they met. Both had been previously married and had acquired adequate
property or income to support themselves. They clearly didnotwish to be
treated as spouses and both hoped to benefit their adult children (by earlier
relationships) on their deaths. To this end, they kept their financial affairs
separate and kept up separate homes.

[3]Another
reality that confronts us in Canada as life expectancy increases is the
incidence of Alzheimer’s Disease and other forms of dementia in seniors. Here,
Ms. Kish, who is the surviving spouse and the plaintiff herein, has
“severe” dementia and lives in an institution where, one assumes, her care is
paid for by government in large part or completely. It seems doubtful that any
award from the testator’s estate will be of any real benefit to her.

[4]Obviously,
these circumstances distinguish this case from the majority of WVA cases in
which both spouses have contributed not only to mutual support but to the
acquisition of ‘family assets’ over the years and expect that the survivor of
them will continue to enjoy those assets after the death of the other. The
primary question for us is how the “societal norms” of legal and moral
obligations discussed inTataryn [v. Tataryn Estate [1994] 2 S.C.R. 807] are to be applied to the more complex facts before this
court.

In considered Ms. Kish’s needs, Madam Justice Newbury noted
that although Ms. Kish’s income did not cover all of her expenses, the
shortfall could be made up either by renting her house, or selling it and
investing the proceeds. Because of Ms. Kish’s dementia, it is unlikely that a
large award would be spent on her during her lifetime, and would likely just
add to her estate. Madam Justice Newbury wrote:

[53]Mr. Doyle
also submits that the fact Ms. Kish is in a full-time care facility and is
mentally incompetent means she is not in a position to spend sale proceeds for
her own benefit. Sadly, her needs are now few and are taken care of in the
institution. There is little that can be done to increase her enjoyment of
life. It is hard to disagree with the suggestion, which we put to counsel
during the hearing, that the trial judge’s award under the WVA will only serve
the purpose of increasing Ms. Kish’s estate. As noted by Mr. Justice
Finch, as he then was, inFrolek v. Frolek[1986]
B.C.J. No. 1869 (S.C.):

It is not the purpose of theWills Variation Act… to enable an applicant to build up an estate
of her own, but rather to ensure that she is appropriately maintained and
supported during her lifetime.

In balancing the principle of testamentary autonomy, Mr.
Sobchak’s legal and moral obligations to his spouse, and his moral obligations
to his daughter, the Court gave great weight to testamentary autonomy in this
case reflecting what the Court considered to be the expectations of Mr. Sobchak
and Ms. Kish. Madam Justice Newbury wrote:

[60]There
is no doubt that claims of adult children do not and should not overshadow a
testator’s moral duty to a spouse, especially where (as inBridger [v. Bridger Estate 2006BCCA 230] andPicketts[v. Hall (Estate) 2009 BCCA 329]) the relationship or marriage was a long-term one. Here,
however, the parties met late in life after each had become self-supporting and
had had children. They took particular care to keep their finances separate and
consistently indicated they did not wish to be married again. From the
amendments made to their wills in early 2013, it is clearbothwished to
benefit their own children on death to the exclusion of the surviving spouse.
(Arguably, they had an understanding to this effect.) Mr. Sobchak’s estate
was relatively modest (indeed, after payment of the income tax on his RRIF, it
was $186,000 – unless one adds in $74,000, representing the $12,000 in cash
received by his daughter and the $62,000 amount referred to in the “Lending
Agreement” described earlier). Using the larger figure of $260,000, the estate
exceeds the equity in Ms. Kish’s house by only $40,000; using the $186,000
figure, his estate (to which she had not contributed) was less than her main
asset.

[61]InTataryn,the Court
stated that testator autonomy is one of the two interests “protected” by the
WVA. In the circumstances of this case, it seems to me that “contemporary
community standards” would be more respectful of that principle than was found
to be appropriate in the ‘traditional’ marriages inBridgerandPicketts.
Many today would find it unfair or inappropriate to disregard the wishes ofbothparties that
their modest estates, built up through their own individual efforts, should be
their own and that their respective children should benefit exclusively
therefrom. And, while it is true that government is presumably supplying
Ms. Kish’s needs, most would not regard her as living on some type of
subsidy or ‘handout’. Rather, she is receiving benefits from a medical system
to which all Canadians contribute and from which all are entitled to receive
medical care.

Conclusion

[62]Like
the trial judge, this court can do no better than exercise its discretion based
on all of the relevant factors in the particular case before it. In my opinion,
the factors that weigh most heavily are the relative sizes of the two estates
on the one hand, and on the other, the legal support obligation to which
Mr. Sobchak would have been subject if the parties had separated during
his lifetime. In all the circumstances, I cannot say the trial judge erred in
finding that Mr. Sobchak failed to make “adequate provision” for
Ms. Kish, even though she has the equity in her home to meet her basic
needs.

[63]At
the same time, I conclude that through the lens of “modern values and
expectations”, the parties’ wishes remain an important consideration. The
parties’ particular circumstances and their relationship weigh strongly, in my
opinion, in favour of respecting testator autonomy. I would, with respect, give
more weight to that principle than did the trial judge and would therefore
reduce the award to Ms. Kish to $30,000.

No comments:

Disclaimer

Rule of Law web-log is intended for general educational purposes only, and you may not rely on its contents for legal advice. Please keep in mind that the laws of British Columbia are often different from the laws of other Provinces of Canada, States of the United States of America, and other countries. Furthermore, the law changes, and what was once an accurate statement of the law, may now be outdated and inaccurate. If you have a specific legal problem or issue, please consult a lawyer who is familiar with the laws of your province, state or country. Neither reading this blog, nor sending me an unsolicited email will create a solicitor and client relationship with me.